Power Grab

The nation’s privately owned utility companies are making the rounds in Washington talking like consumer advocates. That turn of events may surprise the companies even more than it does consumer groups, but the fact is that the companies make a good consumer case.

They are trying to persuade Congress to clear up a murky regulatory decision that could result in handing over to municipal utility companies for a song hydroelectric plants built by private utilities in the 1920s and ‘30s, plants that now generate the cheapest power available. When the cheap power is pooled with more expensive power generated with oil or coal, it holds down prices for all customers in a system.

The hydroelectric plants were built under 50-year federal licenses that are beginning to expire. Unless Congress acts, public power operations would have first call on 11 plants whose licenses already have expired for no other reason than that they were public. The benefits of cheap power from those 11 plants would be taken away from about 8 million customers and given to something under 1 million.

In one example, Pacific Power & Light in Oregon would get $9.4 million from a public power operation for a hydroelectric facility and be forced to spend $700 million for a coal-fired power plant to make up for the loss of generating capacity. Southern California Edison Co. operates 21 licensed plants and could lose two of them. The effect would be to transfer the cheap-power benefits from 3.4 million customers to about 3,000.

In market theory the most efficient approach would be to auction a plant to the highest bidder when the license expires, but the public power operators would fight that as hard as the privately owned utilities would. The next best thing for Congress is to leave well enough alone--that is, to enact legislation that would continue to spread the benefits of cheap hydroelectric power among the largest number of consumers.